Should You Invest in Walgreens?

PHOTO CREDIT: Walgreens

OVERVIEW

Walgreens Boots Alliance Incorporation is a company based in the United States. The company operates a chain of over 13,000 pharmacies in the United States and 8 other countries around the world. The company sells prescription drugs (both to individual customers as well as in wholesale) and also sells other non-prescription drugs and different merchandise. The company was founded in 1901.

Why You Should?

  1. Walgreens is a great reopening play in an investor’s portfolio. As people around the world increase their mobility, Walgreens will see strong demand return for their healthcare and general merchandise purchases (especially over-the-counter medicine). This will benefit the company and investors.
  2. Walgreens operates as one of the world’s largest and most premier pharmaceutical companies. The company operates over 13,000 stores and is found in most communities domestically and in some international markets. This scale can help the company get cheaper deals on products (bought wholesale) and grow into new markets.
  3. Walgreens is also known as a pharmaceuticals powerhouse. The company operates an extremely diverse business in the healthcare sector. Not only does the company fill prescriptions for individual customers, but it also is starting to offer primary care clinics after selling its wholesale business. These primary care offerings will benefit the company and investors.

Why You Should Not?

  1. The company faces tough competition in the healthcare and pharmaceutical industry. Some of this competition includes CVS, Walmart, Costco, and many others. This competition might hurt the company and its investors in the future.
  2. Walgreens also relies on its brick-and-mortar retail stores for the sale of its products. Recently, it has been scaling its e-commerce solutions where customers can order medications online. However, Walmart and Amazon have done a far better job in scaling this service, something that might hurt the company and its investors in the future.
  3. Walgreens, like most of the retail industry, has extremely weak margins and very high revenue numbers. However, these low margins will hurt the company when it has headwinds in its business and might cause it to break even or report a loss in that specific financial year. Low margins might hurt the company and its investors in the future.
  4. Walgreens’ stock price has massively underperformed the market over the past couple of years. In fact, the company’s stock price has more or less consistently gone down over the past 5 years. This is because of new competition and weak earnings results caused due in part because of higher costs. This underperforming stock has hurt the company and its investors.

MY OPINION

I think that Walmart might be an ok long-term investment due to its position as a good reopening play, its position as a large company, as well as its position as a pharmaceutical powerhouse. However, tough competition, digital competition, weak margins, as well as an underperforming stock price might hurt the company and its investors in the future. I would rather look into stocks like Walmart and Amazon instead though.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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